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UK & Europe
As part of its response to the current situation in Ukraine, the UK Government has recently enacted sanctions legislation which introduces additional grounds for designations of individuals and entities under the existing UK-Russia sanctions regime. However, no new designations have been made under these grounds. In this post, we consider the implications and potential impact of these changes.
Prior to the recent amendments, the UK-Russia sanctions regime (contained in The Russia (Sanctions) (EU Exit) Regulations 2019 (2019 Regulation) allowed for the designation of an "involved person", who was defined to be:
The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (which came into force at 5pm on 10 February 2022) (Amending Regulation) expanded the scope of "involved person" in the 2019 Regulation to include a person who "is or has been involved in … obtaining a benefit from or supporting the Government of Russia".
Such additional persons who might now be designated as an "involved person" in the include, amongst others, persons who are:
Nine Russian sectors are listed as ‘sectors of strategic significance’: (i) chemicals; (ii) construction; (iii) defence; (iv) electronics; (v) energy; (vi) extractives; (vii) financial services; (viii) information, communications and digital technologies; and (ix) transport. This includes sectors that are already targeted by sectorial sanctions, and new sectors.
However, the Amending Regulation does not identify what is or could be viewed as ‘business of economic significance’ to the Government of Russia.
A Government of Russia-affiliated entity is defined to include a person, other than a natural person: (i) which is owned or controlled directly or indirectly by the Government of Russia; (ii) in which the Government of Russia holds directly or indirectly a minority interest; (iii) which receives, or has received, financing, directly or indirectly, from the Russian Direct Investment Fund or the National Wealth Fund, (iv) which otherwise obtains a financial benefit or other material benefit from the Government of Russia.
In this context, ‘Government of Russia’ is defined to include: (i) the Presidency of the Russian Federation; (ii) public bodies and agencies subordinate to the President of the Russian Federation, including the Administration of the President of the Russian Federation; (iii) the Chairman of the Government of the Russian Federation and the deputies of the Chairman of the Government; (iv) any Ministry of the Russian Federation; (v) any other public body or agency of the Government of the Russian Federation, including the armed forces and law-enforcement organs of the Russian Federation; and (vi) the Central Bank of the Russian Federation.